(Solved by Humans)-Yoyo has, for many years, manufactured a yoghurt drink called ‘Yog-Nog’. This brand name

Paper Details

Yoyo has, for many years, manufactured a yoghurt drink called ‘Yog-Nog’. This brand name was originally acquired 10 years ago from a competitor company. The cost of this acquisition came to C800 000, which was duly capitalised. No amortisation had been processed against this brand name since the brand was already 80 years old at the time of acquisition and, at that time, there was no indication that demand for this drink was diminishing. Sales of Yog-Nog have, in recent times, been falling. The marketing department, after much research into the related consumer behaviour, suggested that the fall in sales was related to the outdated brand name of the drink. The suggestion was accepted and the drink was re-launched as ‘Yogi-Yippi’ during late December 20X10. The cost of re-launching the drink came to C450 000 and was capitalised as a Yogi-Yippi Brand name since it was expected that sales would now improve. The previous brand name, ‘Yog-Nog’, with a carrying amount of C800 000, was expensed in full in the current year ended 31st December 20X10. Required: Critically analyse the above issue, explaining whether the treatment is correct or incorrect and justifying your advice with reference to International Financial Reporting Standards.